The profit-maximizing combination of resources in a perfectly competitive situation occurs at the point at which
A. MRP of labor = price of labor (wage rate).
B. MRP of capital = price of capital (cost per unit of service).
C. MRP of land = price of land (rental rate per unit).
D. All of these are correct.
Answer: D
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If a firm shuts down in the short run, it will:
A. incur losses equal to its fixed costs. B. have total revenue greater than total fixed costs. C. reduce its losses to zero. D. do this because P > AVC.
Macroeconomics is best defined by which of the following statements?
A. Macroeconomics is the study of how the prices of individual goods are determined. B. Macroeconomics is the study of the behavior of the economy as a whole. C. Macroeconomics is the study of individual households. D. Macroeconomics is the study of how firms attempt to maximize profits.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.